Jobs report spurs Fed to action

USA businesses have added 13.7 million jobs in a little less than six years, but White House economic advisor Jason Furman says “We have more work to do”.

Friday’s jobs report also highlighted Brainard’s argument that weakness in the global economy could constrain US growth more than policymakers now anticipate.

Construction employment rose by 46,000, while lower-paid sectors continued to predominate, including retail (30,700) and professional services (27,000).

Fed Chair Janet L. Yellen told Congress on Thursday that she and other central bank policymakers would analyze the November jobs report “very closely” to determine if the economy is ready for a hike in the benchmark federal funds rate.

While Yellen sent strong signals that the Fed could be on the verge of approving its first rate hike in almost a decade, she noted that unforeseen economic and financial developments over the next few days could sway its decision. It followed a robust report a month earlier when nonfarm payrolls surged by 271,000, placing a December rate hike by the Fed squarely on the table.

Wages are continuing to rise, but not so much as to cause concern about future high inflation.

Economists expected the U.S. economy to add 200,000 jobs in November and the unemployment rate to remain unchanged at 5%, a seven-and-a-half-year low. The addition of 211,000 jobs likely paves the way for a rate hike later this month. “It also eliminates any fears of downside risk to growth, but provides no evidence of a significant upshift beyond the 2.2 percent average since the recovery began”.

The dollar could rise further should the Fed raise rates even as its counterparts overseas, such as the European Central Bank, cut them further.

Last month the foreign-born population had an unemployment rate of 4.4 percent and a labor force participation rate of 66.1 percent.

Investors cheered the jobs report, which helped send the Dow Jones industrial average soaring 360 points in afternoon trading.

“Over the past 3 months, the economy has created an average of +218k jobs per months”.

The numbers exceeded Bloomberg economists’ forecast by 11,000, making it the second month in a row gains surpassed experts’ expectations. The government bean-counters bumped up their estimates of job gains in prior months.

In company news, Avon Products jumped 12.3% after sources cited by the Wall Street Journal suggested the group was edging closer to a deal with private-equity firm Cerberus Capital Management.

“The U.S. economy seems to be steady, and that’s good because that means we have to hire more”, Tyagarajan said. The labor force is made up of the employed and the unemployed.